Last updated: July 2026 | Reading time: 10 min
W2 hospital employees are limited to contributing $23,000 (2026) to their 403(b) per year. Self-employed nurses — 1099 travel nurses, per diem workers, nurse educators, legal nurse consultants, health coaches — can contribute up to $69,000 per year into a Solo 401(k). That's three times the contribution limit, which translates into dramatic tax savings and dramatically faster wealth accumulation.
| Contribution Type | 2026 Limit | Notes |
|---|---|---|
| Employee elective deferral | $23,000 | 100% of compensation up to this limit |
| Catch-up contribution (age 50+) | +$7,500 | Additional if 50 or older |
| Employer profit-sharing | Up to 25% of net self-employment income | This is the big lever for high earners |
| Total max (under 50) | $69,000 | Employee + employer contributions combined |
| Total max (age 50+) | $76,500 | Including catch-up |
| Account | Who Can Use It | 2026 Max Contribution | Roth Option? | Loan Option? |
|---|---|---|---|---|
| Solo 401(k) | Self-employed, no W2 employees | $69,000 | Yes (at most providers) | Yes (up to $50k) |
| SEP-IRA | Self-employed | $69,000 (but only employer side — 25% of net income) | No | No |
| SIMPLE IRA | Small businesses | $16,500 | No | No |
| 403(b) (hospital) | W2 hospital employees | $23,000 | Sometimes | Sometimes |
| IRA (Traditional/Roth) | Anyone with earned income | $7,000 | Roth IRA: yes | No |
The Solo 401(k) beats the SEP-IRA for most nurses with self-employment income below $230,000 because it lets you contribute the full $23,000 employee deferral before the 25%-of-income employer cap kicks in. The SEP-IRA only allows the employer side, which at lower income levels caps out earlier.
A self-employed nurse in the 24% federal bracket contributing $46,000 to a Solo 401(k) (realistic for a nurse earning $130,000 net self-employment income):
| Scenario | Net Self-Employment Income | Solo 401(k) Contribution | Federal Tax Savings |
|---|---|---|---|
| No retirement account | $130,000 | $0 | $0 |
| IRA only | $130,000 | $7,000 | $1,680 |
| SEP-IRA (25%) | $130,000 | $32,500 | $7,800 |
| Solo 401(k) (maxed) | $130,000 | $46,000 (employee + employer) | $11,040 |
That's $11,040 less in federal taxes. In a high-tax state like California or New York, add another $3,000–$5,000 in state tax savings. The Solo 401(k) contribution also reduces self-employment income for SE tax purposes (on the employer side), creating additional savings.
| Provider | Annual Fee | Roth Option | Loan Option | Notes |
|---|---|---|---|---|
| Fidelity Self-Employed 401(k) | $0 | Yes | No | Best for low-cost index funds |
| Vanguard Individual 401(k) | $20/year (waived over $50k) | No | No | Low-cost funds, no Roth |
| Charles Schwab Solo 401(k) | $0 | No | No | Solid option, wide fund selection |
| TD Ameritrade Solo 401(k) | $0 | Yes | Yes | Good for Roth + loan feature |
| Etrade Solo 401(k) | $0 | Yes | Yes | Roth + loans + brokerage access |
You'll need: your SSN or EIN (a free EIN from IRS.gov is recommended — it separates your business accounts from personal), your business name (even a sole proprietorship counts — use your legal name + "d/b/a" if you operate under a different name), and proof of self-employment income (a recent 1099 or Schedule C).
Solo 401(k) plans run on calendar year. The employee deferral must be elected (in writing or through the platform) before December 31 of the tax year. The employer profit-sharing contribution can be made up to your tax filing deadline (April 15, or October 15 with extension).
Practical strategy: immediately after opening the account, elect to defer the full $23,000 from your next self-employment payouts. Then at year-end, calculate how much employer contribution you can add based on your net Schedule C income.
For simplicity: target-date fund closest to your retirement year, or a three-fund portfolio (total US market index, international index, bond index). Asset allocation at this stage matters less than contribution rate — maximize contributions first, optimize allocation second.
If your Solo 401(k) plan allows after-tax contributions and in-plan Roth conversions (check the plan documents — not all providers support this), you can potentially shelter even more after-tax dollars in a Roth structure. This is an advanced strategy typically worth pursuing only when you've maxed the pre-tax contribution and have remaining income you want in a tax-free account. A CPA with self-employed retirement planning experience can model whether this fits your situation.
| Action | Deadline |
|---|---|
| Open the Solo 401(k) account for that tax year | December 31 of tax year |
| Elect employee deferral amount | December 31 of tax year |
| Make employee deferral contribution | December 31 (or tax filing deadline — varies by provider) |
| Make employer profit-sharing contribution | Tax filing deadline (April 15, or October 15 with extension) |
| File Form 5500-EZ (required when plan exceeds $250,000) | July 31 of following year |
See also: Nurse Backdoor Roth IRA · 1099 vs W2 for Travel Nurses · Nurse Retirement Planning Guide
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